Vessel Order Dearth Seen Spurring China Shipyard Closings

Shipyards in China, the world’s largest vessel-building nation, are at risk of closing after they failed to secure orders, according to ICAP Shipping International Ltd.

Thirty-eight percent of yards in the country didn’t get contracts for new vessels in 2012 and 10 percent have no deliveries scheduled beyond the year’s end, the London-based shipbroking unit of ICAP Plc said in a report sent by e-mail on Dec. 24.

“There is a real chance now that a significant number of yards will close,” ICAP said. Current prices for smaller new vessels, known as newbuildings, are loss-making unless shipyards receive a “considerable subsidy,” it said.

About 30 percent of ships being built and expected to be finished in 2012 didn’t meet completion schedules and “will likely never deliver” because the owners couldn’t get funding from banks to pay for them, ICAP said.

A total of 999 vessels worth $72.5 billion were ordered worldwide in the first 11 months of 2012, the lowest number of contracts since 1999, according to Clarkson Plc (CKN), the largest shipbroker. China has the most newbuildings on order when measured by capacity, Clarkson data show.

Shipbuilders delivered 2,286 vessels from January to November, including 1,052 from China and 443 from South Korea, the second-largest shipbuilder, according to Clarkson.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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